New tariffs imposed by the U.S. administration are set to disrupt key commodity markets in 2025. Our team examine their impact and look at how numerous other forces will shape supply, demand, and prices over the year to come.
With the United States’ new administration already announcing steep tariffs and triggering high-impact retaliatory actions, it’s been anything but a slow start to 2025 for teams in international trade and procurement. And those are just one of the major disruptive forces challenging category managers to evolve and adapt their strategies today.
In the latest edition of our Commodity in Focus series, WNS Procurement’s Garvit Gupta, Nidhi Jain, Kanica Goel, Shruti Pathak, and Vivek Aggarwal came together to share valuable insights into the knock-on effects of the U.S.’ new tariffs, and the overall outlook for key commodity markets this year.
You can watch the full session on demand to get a complete picture of what 2025 has in store for commodity markets. But in the meantime, we’ve summarized some of the key takeaways below.
Global uncertainty is set to continue through 2025
Opening the session, the team first looked at the big picture and overall economic outlook for 2025. And perhaps unsurprisingly, that picture remains one of uncertainty.
In the U.S., GDP growth is forecasted to slow due to a gradual decline in consumer spending. But even in Europe where projected rates are more positive thanks to rising consumer demand, political uncertainty in key nations like France and Germany still threatens to negatively impact growth.
With inflation set to fall slowly in most nations – excluding China where continued economic challenges should see it increase slightly – and unemployment rising, real wage growth will also slow.
While the overall economic outlook isn’t wholly positive, it does paint a picture of a slow global recovery. However, economic challenges are just one of the major issues disrupting the global supply and procurement environment in 2025. Amid these tough economic conditions, the key risks to watch in 2025 that could potentially alter macroeconomic assumptions include:
- Extreme weather events following the hottest year on record.
- Rising protectionist policies – such as the tariffs recently introduced by the U.S.
- Geopolitical tensions, including the ongoing war in Ukraine.
- Unexpected shifts in major central bank policies.
The impacts on key procurement categories
After setting the scene, the team gave detailed projections across five category areas, examining how prices and supply are likely to shift throughout the year:
#1) Energy
In the energy space, crude oil prices are set to fall by around 8% this year. This will primarily be driven by a supply surplus, created by rising non-OPEC crude oil production in countries like the U.S. and Brazil.
Prices for natural gas are set to increase by 17% and 50.5% in the EU and U.S. respectively, due to reserve depletion and high replenishment demand which have been intensified by major winter storms. With demand growth outpacing supply growth, natural gas supply deficits are expected to fall throughout the year.
A potential trade war between the U.S. and its key trading partners could negatively impact global economic growth, thereby reducing energy demand. Further, the rolling back of environmental policies in the U.S. will make it easier to undertake new oil and gas projects. This could help stimulate supply but will carry a long lead time before any supply-side impact is seen.
#2) Metals
Base metal prices are set to increase through 2025, primarily due to growth in supply deficits. However, nickel is set to remain in a supply surplus, pushing prices down by around 1.7%.
The new U.S. tariffs are set to have the biggest impact on aluminum and copper markets, where prices are forecasted to rise by 7.1% and 4.1% respectively, driving organizations to explore alternatives in the LME market.
After a relatively weak 2024, precious metal markets are set to rise again in 2025. Gold prices will surge 12% YOY, due to increasing demand for safe haven assets amid economic disruption. Silver and platinum are largely expected to follow the trend in gold, as they have in the past.
#3) Agricultural markets
Ample supply of wheat in the U.S. and southern hemisphere are set to push prices down in the region this year. As a net exporter of wheat, tariffs imposed by the U.S. will also reduce international wheat demand, also sending prices downwards in the country. However, projected depletion in global corn stocks will have the opposite effect on corn prices.
In the vegetable oil markets, both palm oil and soybean oil should see small price increases due to reduced output growth. In the case of soybean oil, this impact will be limited thanks to ample stocks and high production in LATAM.
All agricultural markets have seen significant supply and price impacts from negative weather events – with the greatest impacts experienced in soft commodity categories. Both coffee and cocoa prices are forecasted to rise sharply due to a 12% and 20% fall in their respective stock-to-use ratios.
#4) Dairy
Dairy derivative prices rose throughout 2024, driven in part by increased exposure to bovine illnesses and weather uncertainties which reduced milk output. With new vaccines now rolled out and expectation of favorable weather, output in 2025 is set to increase once more, driving down prices across Europe.
However, the increased prices seen last year helped fuel more exploration of plant-based alternative fats, which are quickly becoming a preference for many customers. That may put further downward pressure on dairy prices, as overall demand falls.
#5) Packaging
Prices of almost all major resins – including HDPE, PP and PET – are forecasted to fall by an average of around 4% in 2025. This is widely driven by drop in feedstock prices and ample supply situation. However, macroeconomic shifts will also play a role in these price trends.
Stimulus measures implemented by the Chinese government and rate cuts by the European Central Bank and U.S. Federal Reserve are all expected to help stimulate consumer demand.
The U.S.’ new tariffs, and the retaliatory actions taken by other nations, will bring disruption to resin markets this year. As a net exporter of HDPE and PP resins, the U.S. will likely see a fall in international demand for its outputs, driving costs down domestically. For PET, the reverse will be seen, where tariffs will make it harder for organizations in the U.S. to justify importing these resins.
In the pulp market, price hikes and expected tight supply will push prices up – especially in the U.S., where tariffs on Canada will contribute to overall price increase.
Make sure you’re ready for whatever tomorrow holds
Extreme weather events, tariffs, geopolitical disruption and more will all make it tough to consistently source the right goods at the right price throughout 2025. To mitigate supply and price concerns, procurement teams need access to reliable, timely market insights and intelligence that enable them to make informed proactive decisions.
To get our full commodity market outlook for 2025, watch the webinar on-demand.